Since it would be your “primary” residence one would be renting out, I would be surprised the bank/IRS would allow you to purchase a new “primary” home.  

We were told that lawyers were working out the tax lien issues (I assume the bank, IRS, and/or original owners lawyers).

This looks similar to an HOA auction play....you need a low purchase amount, since you're just buying the rental income stream until the bank/IRS comes knocking, not actually buying the property for a long term.

Great community, great employers (Federal Reserve Bank, IRS, GM Fairfax auto factory, Ford Claycomo auto factory, Garmin, Cerner, Hallmark Cards, etc.) and you can get good cash flowing homes for under $100K.

Here in sweden, we have different typecodes for example, a residential house is "small house" and get something around 200 and u get to detuct 2% each year of the buildings value of what you paid for it meanwhile a rental property have a typecode around 300 and u get 3% each year instead of 2% to deduct-----> Question 1: Can i buy a house and make the bank/irs look at my property as a rental property instead of "small house" ?

There can be other liens on the property including bank, IRS, HOA, utilities and mechanics.